Coalition needs to change course

Although the York economy is faring better than other cities in the north of England, the Coalition Government’s decisions to halt schools and hospital building have hit local companies like Shepherds.

I want the Chancellor to give the construction industry a boost in the Budget in the way the Labour government did in 2008 when we cut VAT from 17½ per cent to 15 per cent. He should reverse the coalition government’s VAT tax hike (now at 20 per cent) back down to 17 ½ per cent, and should temporarily cut VAT on home repairs and maintenance to 5 per cent, as Labour is proposing, to help small building companies.

A temporary VAT cut would also ease the pressure on York families and pensioners. I want the Chancellor to think again about changes to tax credits and child benefit, which will mean a loss of up to £4,000 a year for 400 York families with children.

From next month couples earning less than £17,700 will need to increase the hours they work from 16 to at least 24 hours a week or they will lose all their working tax credit of £3,870 a year. This will affect 400 couples with 800 children in York, according to government figures.

These are families trying to do the right thing, but it is almost impossible to increase their hours at a time when the economy is flatlining and unemployment rising.

This unfair change could be cancelled at a stroke if the Chancellor closed a stamp duty tax avoidance loophole on properties worth over £1 million.

The Government also needs to urgently review its planned changes to child benefit.

It cannot be right that a two-earner family each earning £42,000, a total of £84,000, would keep all their child benefit, but a single-earner family on £43,000 would lose it all.

These changes are coming in at a time when families are being hit hard by tax rises and spending cuts that go too far and too fast, and by record petrol prices.

A temporary cut in VAT would help those families that are struggling, not only with higher prices but also with the hike in petrol prices, by taking almost 3p off the price of a litre of petrol.

When UK banks were hit by the American financial crisis in 2008 Labour was right to rescue Northern Rock, Halifax and Lloyds. If they had gone bankrupt, like some foreign banks, millions of people would have lost their life savings and hundreds of thousands of small and medium sized businesses would have ceased trading.

The bank rescue created a short-term deficit which has to be reduced to stop the national debt ballooning. The problem is that the Coalition Government’s cuts are undermining growth. This means people and companies earn less, and so pay less in taxes.

As a result, the national debt is already higher than ever before and still rising. The Coalition needs to change course.